Sequestration and Social Services: Facing the Inevitable

WASHINGTON, DC - FEBRUARY 05: U.S. President Barack Obama makes a statement during a press conference at the Brady Press Briefing Room of the White House February 5, 2013 in Washington, DC. President Obama urged the Congress to take action to avoid sequester cuts with a short term budget fix. (Image credit: Getty Images via @daylife)

As the budget deal with the arcane name “sequestration” portends automatic 10-year federal budget cuts of $1.2 trillion (including debt-service reductions) on March 1 ($85 billion for 2013), we can expect a parade of interest groups which rely on government contracts to try to stop the oncoming train—or at least find a way to save themselves. It may come as a surprise to some that those calling for a way to sidetrack the sequester—perhaps through a deal to bring in more tax revenue—will include those who speak for the nation’s social service groups who provide everything from day care for the young to meals on wheels for the elderly. One might think, after all, that such community groups are fueled by private charity (think United Way) and even volunteers rather than government largesse.

But in recent years, the nation’s non-profit social service groups have actually become a shadow arm of government, so reliant are they are on grants and contracts, such as the $50-plus billion distributed by the Office of Children and Families. As the Urban Institute has observed, “As government has contracted out more services, the non-profits’ share of the workforce has increased by roughly the amount that government employment has decreased.” But even if there might be good reasons for this approach—and that’s not entirely clear—such groups are among those most likely to be caught in the sequestration. Their funding is part of the portion of government spending—called domestic discretionary spending—that is not protected from the full force of looming cuts and would be reduced by a mandatory 8.2 percent. But such spending is a big part of what fuels social service programs. The Urban Institute has estimated that “human service nonprofits” received, as of 2009, some $100 billion in grants and contracts, amounting to fully 65 percent of their total revenue.

For the full-size chart, readable chart, click the image above.

Not surprisingly, their organized outcry has already begun. Independent Sector, a group which seeks to speak for the nonprofit sector of the economy as a whole, is on record as saying that “steps taken to address the nation’s fiscal challenges should favor policies that will not exacerbate income inequality or increase poverty.” No one can doubt that cuts will disrupt the lives of real people in difficult positions—whether it’s the single mother who sends her child to Head Start or the emotionally troubled person seeking counseling. And the Independent Sector, it’s worth noting, stayed away from emotionalizing the sequestration; its stance is a sophisticated one, calling, for instance, for spending reductions to extend to “non-discretionary programs”—meaning Medicare and the other entitlements.

But whether the sequester hits in full force or not, cuts in social programs are inevitable, as the tsunami of entitlement spending crowds out so much else in government—and lawmakers struggle to control a deficit with the Congressional Budget Office has just estimated, if not tamed, will total $6.9 billion over the coming ten years. In that light, here’s what the non-profit world, which, prior to the 1960s, was supported almost exclusively by philanthropy and volunteers, is not doing: thinking about how to adjust to a world in which it is less reliant on government funding and finding new ways to be effective. If what’s been called “contract government” or “third party government” (in the phrase of Johns Hopkins’ Lester Salamon) was a new model, there’s a need now for a new new model of social services.

That could simply mean raising more from private sources—and, indeed, an increase in the total dollar amount which goes to charity could be a collateral benefit if less government spending and a simpler tax code lead to renewed economic growth. But it should also mean finding new ways to become what Andrew Carnegie once called a “potent force. . .for the common good”.

To do so, social service groups should do more than provide individual help—they should make clear to their communities that they stand for certain constructive values. It’s in this way, that they can do something which government funding doesn’t often do well: influence private norms of behavior. Think here of the advent of Mothers Against Drunk Driving, who have helped make the designated driver a part of our common culture. There is, to be sure, a place for counseling classes which target those with drinking-and-driving problems—but far better, overall, to change the social norm. It may be compassionate to help teen mothers, through day care or job training—but far better to sign on as well to the approach of the National Campaign to Combat Teen and Unplanned Pregnancy, which recognizes that teen motherhood is fundamentally a poor choice to make—and which has helped to reduce it. There are important precedents in U.S. history for providers of social services also enunciating a values message. Think, for instance, of Jane Addams and the settlement house movement, which helped teach English to immigrants and provide safe milk to families. But the hundreds of settlement houses across the country (as I’ve written in The Public Interest) also enunciated, at the turn of the 20th century, a message emphasizing the importance of immigrant assimilation—a message which helped that era’s wave of immigrants on the path to acceptance and upward mobility.

Put another way, social service might think of itself in a way akin to law enforcement. If it were not for voluntary compliance with the law on the part of most Americans, police would be no match for the lawless. Social service organizations may lament not having the funds to meet the needs they encounter—but far better if they take on a public role such that fewer Americans need their services in the first place.